Correlation Between WISE KTAM and United Hero

Can any of the company-specific risk be diversified away by investing in both WISE KTAM and United Hero at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining WISE KTAM and United Hero into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WISE KTAM CSI and United Hero ETF, you can compare the effects of market volatilities on WISE KTAM and United Hero and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in WISE KTAM with a short position of United Hero. Check out your portfolio center. Please also check ongoing floating volatility patterns of WISE KTAM and United Hero.

Diversification Opportunities for WISE KTAM and United Hero

-0.03

Correlation Coefficient

WISE KTAM  United Hero

Good diversification

The 3 months correlation between WISE and United is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding WISE KTAM CSI and United Hero ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Hero ETF and WISE KTAM is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on WISE KTAM CSI are associated (or correlated) with United Hero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Hero ETF has no effect on the direction of WISE KTAM i.e., WISE KTAM and United Hero go up and down completely randomly.

Pair Corralation between WISE KTAM and United Hero

Assuming the 90 days trading horizon WISE KTAM CSI is expected to under-perform the United Hero. But the etf apears to be less risky and, when comparing its historical volatility, WISE KTAM CSI is 102.99 times less risky than United Hero. The etf trades about -0.04 of its potential returns per unit of risk. The United Hero ETF is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  842.00  in United Hero ETF on October 4, 2024 and sell it today you would lose (22.00) from holding United Hero ETF or give up 2.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WISE KTAM CSI  vs.  United Hero ETF

WISE KTAM CSI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WISE KTAM CSI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, WISE KTAM is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

United Hero ETF

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Hero ETF are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, United Hero sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WISE KTAM and United Hero

The main advantage of trading using opposite WISE KTAM and United Hero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WISE KTAM position performs unexpectedly, United Hero can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in United Hero will offset losses from the drop in United Hero's long position.

The idea behind WISE KTAM CSI and United Hero ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.